You’ve probably seen advertisements in which someone stands in front of a villa and tells you about his secret method for becoming a millionaire overnight. Does that seem dubious to you? To us, too. The only real thing about such promises is the hidden desire for financial freedom. But what does it mean to be financially free? That depends on whom you ask. We all approach this subject with different presuppositions. Whether you have enough money to shape your life according to your wishes depends on what you need or what you expect. In the following article, we would like to take a closer look at the question of financial freedom. What are the conditions for financial freedom? How do you fulfill them? And how can you enjoy your freedom responsibly?
When are you financially free?
Financial freedom generally means: greater self-determination. With the money you have, you are free from the compulsion to do things you don’t want to do. For most, this means that they no longer have to work to finance their standard of living. A form of passive income, for example through the investment of capital, replaces active income through wage labour. How much money you need for financial independence depends on your current fixed costs, i.e. rent, electricity, clothing, food, etc. You also need to be aware of your personal circumstances. You also need to be aware of your personal circumstances. Do you live alone or in a partnership? Do you have children or other dependents you care for? Do you have a chronic illness that causes additional medical costs?
Financial freedom also means financial security. If something unforeseeable happens to you, such as an accident or the loss of a job or a failed investment, you will be glad to have a cushion with which you can bridge the loss of income or the additional burden for a certain period of time.
Conversely, there may be one thing you want to be able to afford. In the society in which we live, freedom of design and action are often dependent on your financial possibilities. Do you dream of a bigger flat in a more expensive city or a trip to a faraway country? Would you like to fulfil a project of your heart, open your own café or buy a grand piano to learn to play the piano? Whatever it is, whether you want to prepare for emergencies or expand your freedom of movement, to get there you need more than just your earned income in most cases.
How do you become financially free?
One way: win the lottery. Alternatively, you could inherit a fortune or find money on the street. Serious recommendations are the so-called passive sources of income. In this case, you take a part of your savings and invest it. Through interest, dividends and capital gains, you can gain more and more financial freedom. And you can shorten the time to your declared financial goal. If you rely purely on your income from work, toiling and toiling, you may well have earned enough to literally retire by the time you are 70, but you would also have less time to enjoy that retirement.
Making money work for you is a tempting idea. But please don’t go and quit your job straight away. First look around to see what investment options are available. There are two areas of passive income. One is traditional and the other is digital. The traditional one is the one from shares, real estate, ETFs or other securities. The digital one means that you earn money with the help of the internet. For example, you could generate advertising revenue through product placements on your own website or YouTube channel. You could sell digital products such as photos or videos or offer digital services such as programming software or writing blog posts. Finally, there’s earning returns through P2P lending. Here, “peer-to-peer”, i.e. without a credit institution as an intermediary, investment goes from you to borrowers such as start-ups or other profitable projects. In the case of crowdinvesting, platforms like Wattify help you with this.
Freedom and responsibility
As you can see, there are several paths to your goal of financial freedom. However, there is something else you should be aware of. Achieving your own freedom can sometimes mean limiting the freedom of others. For example, do you invest in an investment fund that represents companies in the arms industry? Or do you advertise a product on your website that violates labour and human rights? One of the greatest sufferers from our personal freedom is the environment. Our comfortable way of life costs nature valuable resources. If we continue to invest in climate-damaging energies such as coal and gas, we are heading for a future in which we will no longer be able to do anything with the time that our financial freedom gives us. On the other hand, because of the affluent society, there are also many people who are already scaling back their demands on themselves and the planet. This can lead to more financial freedom because it simply costs less to own and consume less. This is an exciting topic that we will explore in our next blog post.
A good alternative is the agreement of returns and sustainable investments. Wattify offers you a source of income that takes responsibility for our environment. Our supported projects are specialised in renewable energy. Even our blockchain to generate your return tokens is carbon neutral. Join us and take the first step towards financial and sustainable freedom!